Dubai to build world’s largest mall

Dubai Ruler, Sheikh Mohammed bin Rashid Al Maktoum announced on Saturday plans to build the “Mall of the World”, encompassing an 8 million square foot mall connected to a theme park, 100 hotels and serviced apartment buildings with 20,000 rooms.

The plans, and other new building projects, have led some analysts to warn that Dubai risks overbuilding again as it did a decade ago, culminating in its 2009 debt crisis. Dubai Holding Chief Executive Ahmad bin Byat, however, told Reuters that he believed there was demand for such projects.

“The way things are growing I think we are barely coping with the demand… tourism in growing in Dubai,” Byatsaid in an interview at the group’s headquarters. The “Mall of the World” entertainment district will including air-conditioned streets, according to the press release. The whole project will be built over 10 years and the funds will be raised gradually over that period, Byatsaid. “This is a long-term project and we are betting strongly on Dubai,” he said, adding that the size of the entire project would be in the range of 48 to 50 million square feet.

At least half of the funds will come from internal resources, Byat said, and the rest will be accumulated through the debt market, sales of some parts of the project, revenue from leasing, and partnerships.

However, he did not specify whether talks have begun with banks on financing the project. The first phase of the project will focus on the retail aspect, including the mall, and is expected to be ready in three years. Tenders for the project will go out in about six months.

Dubai is still recovering from its 2009 debt crisis. The International Monetary Fund has repeatedly warned Dubai of another possible boom-bust cycle and called for tighter measures to counter property speculation.